The stock seems to be neither undervalued nor overvalued. After the tech bubble burst(MSFT was selling at about 60 in 2000), most people panicked and started selling their shares in boatloads. The result, the company's shares plummeted.. P/E of 22 is quite descent. Dividend isn't that good if you ask me. If you wanna capture dividend, try some other company that pays descent divident. Income statement shows that their net income was 12 million for period ending jun, 05, compared to 8 million for year ending jun, 04. Furthermore, a new operating system is coming out soon. Although Xbox 360 doesn't seem to do be doing that well, I don't think it'll be a bust. Earnings will be good this year for sure. However, PEG is 1.59, Price/Book is a whopping 6.34. P/B is wayy too high. BTW, their return on capital and profit margin seem to be very high, which is good. ROA and ROE are both about 10%. That's good news. Earnings growth is at 5%. That's good news. I would say it's gonna give you about 15% return, max. But damn, book value per share is at four dollars. P/B is way too high. That scares me. The only reason I see anybody would buy MSFT is because from what I understand a new operating system is coming out. That means good business. Nobody can live without MSFT's operating system. Google might try to challenge them though, but that'll be pretty difficult. And they're not gonna be challenging them this year. People are becoming very cognizant of some of the glitches that Windows seems to have. So Unix is cutting on the profit Overall, I rank MSFT 6/10.